Relaxed regs are the key to driving e-payments growth, says CIB boss: The growth of digital accounts, such as mobile wallets, in Egypt will only be achieved through the continued deregulation of the system, CIB Chairman Hisham Ezz Al Arab said during a webinar hosted by the Institute of International Finance (IIF) on Thursday. According to Ezz Al Arab, the rate of uptake for new mobile wallets has soared over the past few months, during which regulations have been relaxed to encourage a shift away from cash transactions. One key change brought about by covid-19? Customers are currently not required to visit a bank branch in person with their national ID and sign a pile of paperwork, which has simplified the process immensely, Ezz Al Arab noted.

“People — not just the millennial generation — want a simple way to interact with their banks. They want a way to feel safe when performing transactions with their money,” Ezz Al Arab said, noting that relying on digital channels is the best way to achieve that sense of security, particularly as the banking sector has historically been the most trusted place for personal data storage. Another key feature of mobile banking channels is the low cost, he says. Small clients, who are traditionally “ignored” in favor of bigger players, tend to cost more to incorporate into the banking system than the profits they bring in, simply due to the paperwork involved.

Ezz Al Arab stressed that financial inclusion is not a gift, but rather a right for every citizen that the country should be able to afford efficiently and at a low cost. Mobile phones now provide the perfect channel to do so, particularly as the mobile penetration rate in Egypt is extremely high and reaches segments of the population that is typically unbanked, such as those who live in rural areas. “Devices are the solution for financial inclusion,” he said.

The small player is still not entirely incorporated: Ezz Al Arab also discussed the digital identity component of banking, saying that a person or business’ digital identity provides a holistic snapshot of the individual, including their behavior. On that note, he noted that banks are still lagging behind in understanding small businesses because banks typically handle these businesses in the same way they would a large corporate client, rather than by understanding the full identity. “Unless banks move their lending model from the traditional corporate lending to behavior-based lending, a small business will choose to access financing from a supplier or offtaker who understands them rather than a bank — even if the cost is higher,” Ezz Al Arab said.